Horizon Gold Limited's Gum Creek Project Advances with Positive Feasibility Study Results
HRN (HRN) Share Update July 2024 Sunday 21st
Horizon Gold Limited Announces Positive Developments in Gum Creek Project
Horizon Gold Limited (ASX: HRN) has released its quarterly activities report for the period ending 30 June 2024, highlighting significant progress in the Gum Creek Gold Project.
Instant Summary:
- Continued work on improving economic outcomes of Gum Creek Project.
- Focus on reducing initial pre-strip mining, dewatering costs, and sustaining capital expenditure.
- Gum Creek Gold Project deemed a robust viable stand-alone mining operation.
- Potential to extend mine life through underground mining and additional drilling.
- Secured short-term funding facility of up to $1,000,000.
Project Overview
Horizon Gold Limited is focused on advancing its 100%-owned Gum Creek Gold Project, located in the Mid-West Region of Western Australia. Historically, Gum Creek has produced over 1 million ounces of gold and currently hosts a gold resource of 44.45Mt @ 1.50g/t Au for 2.14 million ounces, including a 1.30 million ounce free milling gold resource.
The project covers 504km² of granted tenure over the highly prospective and underexplored Gum Creek greenstone belt, which includes 37 open pit and three underground gold mines.
Scoping Study and Economic Improvements
Horizon recently completed a scoping study on free milling, near-surface open pittable resources, assessing the potential to recommence production through a new processing plant at the previously permitted Gidgee mill site. The study returned compelling financial outcomes from the A$2,900/oz gold price base case, including an initial open pit mine production target of 24.46Mt @ 1.13g/t Au for 888,000 ounces, a pre-tax cashflow of A$574M, pre-tax NPV8 of approximately A$318M, a pre-tax IRR of 31.5%, and a payback period of 3.0 years from the commencement of mining.
During the quarter, further work focused on reducing pre-production capital expenditure. Deposits with lower strip ratios were prioritized in the mining schedule to reduce initial pre-strip mining and dewatering costs. The revised mining schedule also aims to reduce sustaining capital expenditure through lower water management-related capital requirements.
Future Potential and Feasibility Study
The work completed during the quarter supports the view that the Gum Creek Gold Project can be a robust, viable stand-alone mining operation. Consequently, Horizon Gold Limited's Board is working towards the commencement of a Feasibility Study.
The project retains significant upside potential, including excellent prospects for extending the proposed mine life through underground mining and additional drilling at the 12 resource areas not included in the scoping study. Evaluations of underground mining options at all deposits, including Swan/Swift, Kingfisher, Omega, and Wilsons, are yet to be conducted. Additional drilling could potentially increase the resource size and gold grade of these deposits, making them economically viable for inclusion in the mining schedule and further enhancing the project's positive economic outlook.
Corporate Developments and Financials
In June 2024, Horizon secured a short-term funding facility of up to $1,000,000 from Zeta Energy Pte Limited, a wholly-owned subsidiary of Horizon's major shareholder, Zeta Resources Limited. The loan facility is unsecured, can be drawn in tranches of not less than $50,000, and interest is payable at 8.0% per annum. The funds will be repayable by no earlier than 31 December 2024. As of the quarter's end, no funds had been drawn down on the facility.
Horizon spent $468,000 on exploration and evaluation activities during the quarter, primarily related to the economic evaluation of the Gum Creek Gold Project. The company had a cash balance of $219,000 as of 30 June 2024.
The positive developments in the Gum Creek Project are likely to boost investor confidence in Horizon Gold Limited. The promising feasibility study results and the potential for extending the mine life through underground mining and additional drilling are significant positives. The secured funding facility also provides financial stability for the company's ongoing activities.
Investor Reaction:
Analysts and investors have responded positively to the announcement, highlighting the project's robust economic potential and the strategic steps taken to reduce costs and improve financial outcomes.
Conclusion:
Investors should closely monitor Horizon Gold Limited's progress with the Gum Creek Project, particularly the upcoming Feasibility Study. The project's potential for extended mine life and improved economic outcomes makes it a compelling investment opportunity.